International Distribution Services : RMG ESG Appendix 2023-24

ESG APPENDIX

2023-24

Royal Mail Group Limited

1 Royal Mail ESG Appendix 2023-24

ESG Appendix

SCOPE AND

REPORTING STANDARDS

This ESG Appendix accompanies our 22nd annual ESG Report which can be found here. Our ESG Report provides a high-level overview of Royal Mail Group's ESG programme and strategy, key governance tools, and information on our performance and activity throughout 2023-24.

The report details performance for the non-financial reporting year 2023-24, which started on 1 April 2023 and ended on 31 March 2024.

Our report is prepared in accordance with the Global Reporting Initiative (GRI) Standards for the period 1 April 2023 to 31 March 2024. The report was published 21 June 2024. Our GRI content index can be found on page 7 in this appendix.

We are a signatory to the United Nations Global Compact and work to meet its Principles. The report meets our UN Global Compact Communication on Progress requirements.

Our report continues to comply with legislation, investor and stakeholder expectations, and best practice. We are proud to be independently rated as a leading responsible business across international benchmarks including S&P CSA Global (Dow Jones Sustainability Index), CDP Climate Change, MSCI, EcoVadis and Morningstar Sustainalytics.

Royal Mail, the Cruciform, Parcelforce Worldwide and the Parcelforce Worldwide logo are registered trademarks of Royal Mail Group Limited. All rights reserved. International Distribution Services plc, registered in England and Wales, number 8680755. Registered office 185 Farringdon Road, London, EC1A 1AA.

ASSURANCE OF MATERIAL DATA

Bureau Veritas UK Limited (Bureau Veritas) was engaged to provide limited assurance of select data for the year ending 31 March 2024.

We appreciate this independent verification of, and opinion on, our material data points and assertions, which are incorporated within our reported activity for the year. This comprehensive assurance process takes place throughout the year. It includes the sampling of key data points, testing of the systems and processes used to collect the data, interviews with senior managers, and site visits, as required, to gain an understanding

of the business and how our policies and processes are operationalised.

Bureau Veritas' independent assurance statement is available on our IDS website. Full definitions of the key performance indicators included within the scope of Bureau Veritas' assurance are available in our Reporting Criteria, which can also be accessed

via our IDS website.

ACCESSING THIS REPORT

We have printed a limited number of hard copies of this report in order to minimise waste.

An online version of this report and one accessible to those with disabilities is available to download on our IDS website.

OUR ESG REPORTING SUITE

We have a suite of reporting documents that support our ESG Report and Appendix. These are detailed below.

International Distribution Services plc

Annual Report and Financial Statements

Details statutory disclosures at plc level for both the Royal Mail

and GLS businesses, including our TCFD statement.

	Royal Mail	Royal Mail	International Distribution
	ESG Report	Gender Pay	Services plc
	Modern Slavery
Annual progress against three key pillars	Gap Report
Statement
ESG	ESG
Appendix	Data Pack
Key governance and	Annual breakdown
reporting standards	of ESG data
information,
including GRI content
Assurance
index

Statement

Statement covering

key ESG data

Reporting Criteria

Scope of assured

ESG data

All documents can be found here.

2 Royal Mail ESG Appendix 2023-24

STAKEHOLDER ENGAGEMENT AND MATERIALITY

ESG Appendix

The support of our stakeholders is crucial to our success and the ongoing sustainability of our business. We communicate proactively with our stakeholders to seek their views and understand their needs and expectations.

We have a wide range of stakeholders. They include our customers, investors, unions, communities, suppliers, politicians and regulators. We engage with these groups and others to obtain their views and better understand their needs and expectations.

We recognise two Trade Unions, the Communication Workers Union (CWU) and Unite/CMA, and maintaining a productive and cooperative working relationship with them is a core part of our strategy - noting membership levels of c.82% across our operational and administrative employee groups. The Business Recovery, Transformation and Growth Agreement concluded with the CWU in

July 2023 signals a positive step forward, and a joint programme of work across a range of areas that will enable improved operational performance.

STAKEHOLDER ENGAGEMENT

We are committed to being as open and transparent as possible about our business. We communicate proactively with our stakeholders regularly. We seek to understand their perspectives about our business and our responsibilities. At the same time, we aim to help stakeholders gain a better understanding of our business, as well as our need to change.

Our stakeholder engagement programme has the following objectives:

• To ensure that we continue to meet the needs of our customers, ensuring a modern and sustainable Universal Service.
• To help to provide positive outcomes for local communities.
• To demonstrate active and visible leadership in stakeholder engagement.
• To earn and retain the trust of our external stakeholders and protect our brand.

We commit to disclosing full and accurate information, where this does not breach commercial confidentiality, and to disseminating Company information in a format that is accessible and understandable to stakeholders.

Royal Mail is a politically neutral organisation. As a matter of policy, we do not make donations to any political party. We engage with all politicians and other stakeholders across the political spectrum and at all levels to ensure they understand the value that our service provides, the impact our business has on their community and the relevant issues for our industry.

We appreciate all feedback from our stakeholders. If you would like to get in touch, please contact the Royal Mail public affairs team via the following channels:

Post: Royal Mail Public Affairs Team, Royal Mail, 185 Farringdon Road, LONDON EC1A 1AA

Email: [e-mail]

Telephone: [phone]

3 Royal Mail ESG Appendix 2023-24	ESG Appendix

STAKEHOLDER ENGAGEMENT AND MATERIALITY

OUR MATERIALITY ASSESSMENT

In addition to regular communication with our stakeholders, we conduct an in-depth materiality assessment every two years to help prioritise the ESG topics that are most important to our business and our stakeholders. Our most recent assessment took place early in 2023. We review results of these assessments annually.

In early 2023, we worked with SLR, an independent sustainability and ESG consultancy, to conduct the assessment. Our assessment used the double materiality approach, recommended by the Global Reporting Initiative, which considers our impact on people and the environment through the issues, as well as the impact of the issues on our business. Through this approach, we can understand why issues are important according to whether they pose a high financial risk or opportunity to the business, and if the business has a potentially high impact on an issue.

Our materiality assessment process includes issues identification, identifying and engaging stakeholders and matrix development and validation. In total, 14 issues were identified for inclusion in the assessment.

The issues list draw from our enterprise risk management and annual reporting processes, media analysis, ESG indices, as well as investor, industry body, and wider responsible business research studies.

The resulting materiality matrix uses the qualitative and quantitative inputs from engagement with our internal and external stakeholders to identify which of these issues are the most material to our business, from both a financial and impact materiality perspective.

The results of our materiality assessment have been signed off by Jenny Hall, Director of Corporate Affairs at Royal Mail.

For more information on the 2023 assessment, please see page 2 of our

2022-23 ESG Appendix which can be found on our IDS website.

OUR 5 MOST MATERIAL ISSUES

1	CLIMATE CHANGE
AND EMISSIONS
REDUCTION
2	HEALTH AND
SAFETY
3	CUSTOMER
SERVICE

4 LABOUR STANDARDS AND HUMAN RIGHTS

5 SERVICE RESPONSIBILITY

DOUBLE MATERIALITY MATRIX

impact
Highest		Climate Change &
		Emissions Reduction

								Labour Standards &
								Human Rights
					Stewardship of
					the Environment			Service	Customer
								Responsibility	Service
					Resource			Health & Safety
			Diversity, Equity	Efficiency			Employee Engagement
			& Inclusion
			Community			& Culture1
					Operational Model
					Impacts
					Employee
					Skills &	Corporate
					Development
					Governance
							& Ethics
Impact materiality			Responsible
		Procurement
Financial materiality
				Highest impact
		Key	Environmental	Social	Governance

1 In 2023-24 we reviewed our materiality matrix and adjusted the position of 'Employee Engagement & Culture' to have a higher impact on our business. We understand the impact that Industrial Action has had on our employee engagement and that this is a concern for our stakeholders. Details on how we are addressing this can be found in our 2023-24ESG Report onpage 28.

4 Royal Mail ESG Appendix 2023-24	ESG Appendix

ESG GOVERNANCE FRAMEWORK

Our ESG governance framework
defines key responsibilities and
authorities used to identify and
manage our ESG programme,
in addition to the Company's key
ESG risks and opportunities.
The IDS CEO, supported by the Royal Mail Executive	IDS

plc Board

The International Distribution Services (IDS) plc Board is responsible for setting the objectives and strategy for the Group and for monitoring performance and risk management. The Board is committed to ensuring that it provides effective leadership and promotes uncompromising ethical standards, setting the tone for the Company. The Board receives regular updates on Royal Mail's ESG activities. Maria da Cunha, the designated Non-Executive Director for engagement with the workforce during the year, is also a member of the ESG Committee.

ESG Committee

Board and ESG subject matter experts, takes	(Group)
strategic decisions on ESG matters and is responsible
for ensuring that effective risk management processes
are in place with respect to climate-related risks
and opportunities.

The IDS ESG Committee, a sub-committee of the IDS plc Board, oversees Royal Mail's ESG performance and strategic direction.

The ESG Committee meets four times a year with the CEOs of IDS, Royal Mail and GLS, members of the Executive Board with areas of ESG responsibility, and the ESG teams for both Royal Mail and GLS.

The Committee has a remit across ESG topics including the environment and the suitability of processes in place to manage climate-related risks and opportunities, health and safety, culture and engagement, diversity, equity, and inclusion, supporting our communities including vulnerable customers, and upholding human rights in our business and supply chain.

The Committee also has an interest in Royal Mail's external ESG ratings and how the company engages with its stakeholders. The Committee reviews relevant ESG KPIs at each meeting.

Further details on the Committee and terms of reference can be found on the IDS website.

Royal Mail (Business level)

Executive Sponsor

The IDS Director of Investor Relations is the Group-level sponsor for ESG.

Royal Mail Executive Board

Individual members of the Executive Board	- Angela Noon, Chief Financial Officer, is	- Matthew Newman, Chief Legal Officer,
are responsible for strands of ESG activity,	responsible for delivering our supply chain	is responsible for health and safety,
as follows:	sustainability strategy, including supply	whistleblowing and compliance.
- Jenny Hall, Director of Corporate Affairs, is	chain decarbonisation and risk management.	- Alistair Cochrane, Chief Operating Officer, is
- Hayley Jones-Penny, Interim Chief People	responsible for the implementation of ESG
responsible for shaping and implementing
Officer, is responsible for the employee	related strategies across the operation
the Royal Mail ESG strategy, including the
strands of our ESG strategy, including culture	and fleet.
environmental and community investment
and engagement, health, diversity, equity and
strategies.	- Steve Potts, Chief Information Officer, is
inclusion.
	responsible for cyber security and privacy
		protection.

Royal Mail ESG team

The team of subject matter experts drives the development, implementation, engagement and reporting of the Royal Mail ESG strategy and performance.

5 Royal Mail ESG Appendix 2023-24

OUR BUSINESS STANDARDS AND POLICIES

ESG Appendix

Our approach to ethical business conduct is set out through our wide- ranging business policies. We are committed to operating with integrity and the highest of ethical standards to protect our valued place in society. Our overarching business policies set out our approach to responsible business conduct and integrity.

Customers, investors, governments and a growing number of other stakeholder groups increasingly require companies to have, and execute, an ESG strategy which is supported by robust and credible ambitions and targets.

All of our policies are available to employees via our Intranet and People System portal. Key policies are available externally on our IDS website.

Our Business Standards describe the behaviours we expect to see from all colleagues to ensure we all comply with the law, behave in the right way and treat those around us with respect. We regularly engage our employees around Our Business Standards through our internal communications channels.

In addition, this year, as part of our Change for Good campaign, Our Business Standards booklet was refreshed and re-launched to ensure the guidance was clearer and more accessible for colleagues. The new format categorises Our Business Standards into three key categories focused on doing the right thing for the customer, for each other, and for the business.

The new version was launched as part of the Change for Good campaign in February and was supported by a robust communications campaign utilising all our internal channels; this included videos by senior leaders, new animations on the standards and wide-reachingon-screen displays to bring the campaign messaging to life in a meaningful way.

The Our Business Standards booklet is available online, on both our internal and external websites, and on the Royal Mail People App. All new UK employees receive a copy of the standards and these are discussed during employee inductions within the first eight weeks of joining. For managers, we issue annual refresher training which includes an attestation to confirm that they understand and agree to comply with Our Business Standards.

Most policies are owned and apply to Royal Mail Group. However, we do have some IDS level policies that apply to both Royal Mail and GLS. Those policies are marked 'IDS' opposite.

KEY POLICIES

ESG policy statement (IDS): Our policy statement sets out our commitment to making a positive contribution to society and is aligned to our Group ESG Principles.

Our Business Standards: Outlines the values and standards of behaviour we expect from our people.

Health and Safety policy: Our commitment to managing health and safety risks, removing or reducing the likelihood of injury or harm to our employees or others.

Environment and Energy policy: Our approach to responsible management of natural resources, climate change mitigation and adaptation, along with our commitments to pollution prevention, biodiversity and protection of the environment.

People policy: A single policy statement which sets out our overarching commitment to colleagues throughout their employment with Royal Mail. The People policy is supported by People procedures covering a range of topics including recognition, parental leave, learning and development, and raising grievances.

Equality, Diversity and Inclusion statement: Our commitment to ensuring Equality, Diversity and Inclusion are at the heart of our business values, policies, processes and everyday practices.

Supplier Code of Conduct: Based on the Ten Principles of the UN Global Compact, the Code sets out the social, ethical and environmental conduct we expect from our suppliers.

Policy for the Prevention of Bribery, Corruption and the Facilitation of Tax Evasion: Sets out our approach to minimising the risk of bribery and corruption taking place in any part of our business.

Privacy Notice: Details how we collect and use personal data and privacy rights.

6 Royal Mail ESG Appendix 2023-24	ESG Appendix

ESG RISK MANAGEMENT

The effective management of our ESG risks is critical to our long-term sustainability and to promote a sound control environment, in which we seek to identify, assess and manage risks that could impact our business.

ESG risks are managed through our IDS group-wide risk management framework. The IDS Board has overall accountability for overseeing the operation of sound risk management and internal control systems and, on an annual basis, assess their effectiveness. It has delegated responsibility for this to the Group Audit and Risk Committee (the ARC). The ARC is supported by the Royal Mail Audit and Risk Committee, while Royal Mail management is responsible for the management of specific risks and developing mitigation actions.

IDS principal risks are those that have been identified as having the potential to cause a significant impact on the Group. They could threaten the Group business model, the execution of the strategy and the creation of sustainable value for our stakeholders. IDS's current principal risks can be found on pages 52 to 58 of the IDS Annual Report and Financial Statements 2023-24.

Our principal risks are assessed by the IDS Board on a bi-annual basis and monitored by the ARC across the year. Emerging risks are identified throughout the year and formally assessed by the ARC annually. The IDS Board confirms that robust risk assessments were completed during the financial year. Further information on how principal risks are identified, analysed and managed can be found on pages 49 to 51 of the IDS Annual Report and Financial Statements 2023-24.

For Royal Mail, our approach to key risk areas is detailed opposite.

SUPPLY CHAIN

Risks associated with each supplier are assessed based on the supplier location, size and contract value, business sector and scope, and recorded on the key governance documents relating to contracting.

We ensure that risks, opportunities, and objectives related to our ESG agenda are included within the strategies for each of our supplier categories.

We do not contract with sanctioned entities. The GAN Integrity service is also used to monitor all suppliers against the UK Treasury sanctions list, and EU and US sanctions databases, with updates checked daily. During 2023-24, no suppliers were found to have been in breach of sanctions. The scale of checks on new and existing suppliers has been stepped up in response to sanctions being progressively tightened as a result of the Russia-Ukraine conflict.

GAN Integrity screening is also deployed for all risk areas (Social/Ethical/Environmental) for suppliers where material risks have been identified, over and above the sanctions screening applied to all suppliers.

We regularly review the supply chain risk profile to ensure that we are identifying new risks and setting out mitigating actions, including an annual review of our Modern Slavery risk profile. During 2023-24, we have seen a continuing high level of external supply chain risks, particularly for the global elements of our supply chain. The Russia/Ukraine conflict and instability in the Middle East have resulted in resource bottlenecks for commodities and manufactured products and/or impacts on major supply routes including the Red Sea. Our Supply Chain Risks are carefully managed and pro-actively acted upon to avoid business disruption.

After a contract is awarded, and risk assessment is carried out, the high-risk suppliers will have a supplier management plan put in place to manage and mitigate these risks and any further risks that might be identified.

For some suppliers, we may require third-party audits. The results, including the remediation plans and evidence of completion, are reported via the Supplier Ethical Data Exchange (Sedex) platform or directly to Royal Mail. Sedex allows us to track our suppliers' ESG performance as well as conduct third-party audits to ensure their accuracy of disclosure. We also make use of the Sedex 'RADAR' risk identification tool and the Sedex e-learning modules for Procurement managers.

CLIMATE

We recognise climate change as a key global threat, and one that poses particular risks and opportunities for our business. Identifying these risks and opportunities enables us to enhance the resilience of the business and take advantage of the opportunities it may offer. IDS is committed to implementing the recommendations of the Task Force on Climate related Financial Disclosures (TCFD) established by the Financial Stability Board.

During the year we made further progress against these recommendations and continued to evolve our business, strategy and financial planning processes to take account of our climate-related risks and opportunities. IDS is consistent with ten of the eleven TCFD recommendations, and partially consistent with the TCFD recommended disclosures relating to the impact of climate-related risks and opportunities on business, strategy and financial planning.

We aim to be consistent with this final recommendation by no later than March 2025 and have made further progress in the year. We have embedded carbon considerations into the workstreams of our ongoing transformation programme and begun the process of establishing an internal price for carbon, which will be used to reflect the commercial benefits and risks of carbon impacts across different parts of the business, including financial planning and day-to-day business decision making.

In 2024-25 we plan to review and update our analysis of our climate-related risks and opportunities our business faces over the short, medium, and long term. For more information, please see the full IDS TCFD statement on pages 41 to 48 in the IDS Annual Report and Financial Statements 2023-24.

MODERN SLAVERY

In relation to modern slavery risks, each business unit is asked to confirm that Royal Mail recruitment processes are followed when recruiting new workers (including flexible resource) and procurement processes are followed when onboarding new suppliers and third parties, as these are critical controls to ensure modern slavery is not taking place in our business or supply chains. Material instances of non-compliance are followed up on if appropriate by the Compliance & Ethics team.

Our compliance risk assessments include questions on human rights and modern slavery. The identified risk of human rights violations in our business has been assessed as being low. Our focus has been on agency, contract, and supply chain workers, where human rights issues are most likely to potentially arise. Potential issues could include forced labour, substandard working conditions, fair wages, discrimination, freedom of association and collective bargaining, health and safety, and privacy.

As a responsible business, we are committed to playing our part to help eliminate these risks. To prevent these issues, we closely monitor our supply chain and customers by systematically carrying out detailed due diligence and screening processes, site audits and risk assessments.

In 2023-24, our assessments found that no incidents regarding human rights took place. Concerns related to modern slavery or concerns about human rights violations can be raised by anyone, internal or external, confidentially to our Speak Up helpline available 24 hours a day, seven days a week.

7 Royal Mail ESG Appendix 2023-24	ESG Appendix

GLOBAL REPORTING

INITIATIVE (GRI) INDEX

We report in accordance with the Global Reporting Initiative (GRI) Sustainability Framework.

Our 2023-24 ESG Report has been prepared in	In addition, we refer to page numbers within our
accordance with the GRI Standards for the period	2023-24 ESG Data Pack, Assurance Statement,
1 April 2023 to 31 March 2024. This table includes	Reporting Criteria and the IDS Annual Report and
references to our 2023-24 ESG Report, these are	Financial Statements 2023-24, marked 'ARA'.
marked 'ESGR' and our ESG Appendix (this
document), marked 'ESGRAPP'.

All documents can be found here and here.

GRI CONTENT INDEX

	Statement of use	Royal Mail has reported in accordance with the GRI Standards for the period 1 April 2023 to 31 March 2024
	GRI 1 used	GRI 1: Foundation 2021
	Applicable GRI Sector Standard(s)	N/A
	GRI Standard	Disclosure	Location	Location
	General disclosures
	GRI Standard	Disclosure	Page number(s) and/or links	Explanation or Omission
	GRI 2: General Disclosures 2021	2-1 Organizational details	ESGR 2
			ARA 1, 237
		2-2 Entities included in the organization's	ESGR 2
		sustainability reporting	ARA 2
			Reporting Criteria 1-2
		2-3 Reporting period, frequency and contact point	ESGR 2
			ARA 40, 62
			ESGRAPP 1
			[e-mail]
		2-4 Restatements of information	ESG Data Pack and Reporting Criteria
			ESGR 14
		2-5 External assurance	ESGRAPP 1
			Royal Mail Group Ltd 2023-24 Assurance Statement

8 Royal Mail ESG Appendix 2023-24

ESG Appendix

	GRI Standard	Disclosure	Location	Location
	General disclosures
	GRI Standard	Disclosure	Page number(s) and/or links	Explanation or Omission
		2-6 Activities, value chain and other	ESGR 2, 47	2-6d: Not applicable -
		business relationships	ARA 1, 14-15	no significant changes
		2-7 Employees	ESG Data Pack 8, 10
			ESG Reporting Criteria 14
			ARA 188
		2-8 Workers who are not employees	ESG Data Pack 8
		2-9 Governance structure and composition	ARA 82-85
			ESG Data Pack 10-11
		2-10 Nomination and selection of the highest	ARA 91-94
		governance body
		2-11 Chair of the highest governance body	ARA 82, 86
		2-12 Role of the highest governance body in	ARA 85-90
		overseeing the management of impacts	ESGRAPP 4
		2-13 Delegation of responsibility for managing	ARA 104-105
		impacts	ESGRAPP 4
		2-14 Role of the highest governance body in	ARA 104-105
		sustainability reporting	ESGRAPP 3, 4
		2-15 Conflicts of interest	ARA 40, 78, 88
		2-16 Communication of critical concerns	ARA 22-23, 90
			ESGR 43
		2-17 Collective knowledge of the highest	ARA 42, 81
		governance body
		2-18 Evaluation of the performance of the highest	ARA 81, 91
		governance body
		2-19 Remuneration policies	ARA 113-124, 126
		2-20 Process to determine remuneration	ARA 85, 106-112
		2-21 Annual total compensation ratio	ARA 123-125

9 Royal Mail ESG Appendix 2023-24	ESG Appendix

	GRI Standard	Disclosure	Location	Location
	General disclosures
	GRI Standard	Disclosure	Page number(s) and/or links	Explanation or Omission
		2-22 Statement on sustainable development	ESGR 4
		strategy
		2-23 Policy commitments	ARA 40, 76-78
			ESGRAPP 5
			Our Business Standards
			IDS plc Matters Reserved for the Board 4, 6
			Modern Slavery Act Statement
		2-24 Embedding policy commitments	ARA 27, 39-40,104-105
			ESGRAPP 4-5
			IDS ESG Policy Statement
		2-25 Processes to remediate negative impacts	ESGR 21, 43
			ARA 22-23, 90, 104-105
			IDS ESG Policy Statement
			Modern Slavery Act Statement
		2-26 Mechanisms for seeking advice and raising	ESGR 43
		concerns	ARA 39, 76, 78
			Speak Up (reporting) policy
		2-27 Compliance with laws and regulations	ARA 56, 189
			ESG Data Pack 6
		2-28 Membership associations	ESGRAPP 2
		2-29 Approach to stakeholder engagement	ARA 22-23,89-90
			ESGR 6
			ESGRAPP 2-3
		2-30 Collective bargaining agreements	ESGRAPP 2
			ARA 120
			Modern Slavery Act Statement 5